Why Lorillard, Inc., Alexion Pharmaceuticals, Inc., and Coach, Inc. Are Today's 3 Worst Stocks
The S&P 500 Index , which flirted with breakeven levels for much of the day, couldn't fight its way into the black Monday, finishing below the record closing high it set last Friday. The benchmark index certainly didn't get any help from the likes of Lorillard, , Alexion Pharmaceuticals, , and Coach, , which ended as three of the worst stocks in the entire S&P. The S&P 500, for its part,lost a fraction of a point, or less than 0.1%, to end at 1,962 Monday.
Shares of tobacco giant Lorillard fell 2.5% today, as the stock pulled back after a strong showing last week where whispers of a Reynolds American takeover of Lorillard continued to dominate headlines. The deal has allegedly been in the works for some time now, with Lorillard's strength in the global e-cig industry making the company an especially compelling pickup from Reynolds' perspective. While the prospect of an acquisition can mean big bucks and large premiums for shareholders in the acquired company, there are several cons to consider for Lorillard, regardless of whether the deal goes through or not. If it doesn't, Lorillard shares will likely fall as the premium they'd receive in a merger would be off the table. And even if the deal does close, the companies would face regulatory scrutiny from both the FTC and FDA, which would respectively investigate antitrust issues and the health effects of menthol products and e-cigarettes.
Alexion Pharmaceuticals stock also faced pressure Monday, slumping 2.3% in trading. Today's move comes on very light trading, as volume was nearly 40% lower than 3-month averages. While volume can't be used effectively to gauge the long-term prospects of a stock, low volume moves like today's reflect a lack of conviction on the Street. Alexion, a biotech company, specializes in "orphan drugs" that treat exceedingly rare illnesses, typically for exceedingly high prices. Alexion's most profitable drug, Soliris, was approved last week to treat the autoimmune deficiency myasthenia gravis, in addition to the genetic blood disorder paroxysmal nocturnal hemoglobinuria.
Finally, Coach stock shed 2% today, continuing a nasty losing streak that's seen shares dive more than 16% in the last four days. Oftentimes steep pullbacks like these can be over-exaggerated as investors panic at the slightest hint of a rough patch ahead. That's not the case with Coach, where the panic is justified. Last week the CEO told investors that the luxury fashion retailer will be closing 70 locations in the U.S., or about 13% of its North American store count. Meanwhile, sales are expected to tumble in the high single digits for the fiscal 2015 year, as single-store sales plunge even more dramatically.
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The article Why Lorillard, Inc., Alexion Pharmaceuticals, Inc., and Coach, Inc. Are Today's 3 Worst Stocks originally appeared on Fool.com.John Divine owns no position in any of the stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine. The Motley Fool recommends and owns shares of Coach. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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